PROJECT REPORT
Of
TERRACOTTA POTTERY
(MANUALLY)
PURPOSE OF THE DOCUMENT
This particular pre-feasibility is regarding Terracotta Pottery (Manually) Manufacturing unit.
The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.
[We can modify the project capacity and project cost as per your requirement. We can also prepare
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Lucknow Office: Sidhivinayak Building ,
27/1/B, Gokhlley Marg, Lucknow-226001
Delhi Office : Multi Disciplinary Training
Centre, Gandhi Darshan Rajghat,
New Delhi 110002
Email : info@[Link]
Contact : +91 7526000333, 444, 555
PROJECT AT A GLANCE
1 Name of the Entreprenuer xxxxxxxxxx
2 Constitution (legal Status) : xxxxxxxxxx
3 Father / Spouse Name xxxxxxxxxxxx
4 Unit Address : xxxxxxxxxxxxxxxxxxxxxxx
District : xxxxxxx
Pin: xxxxxxx State: xxxxx
Mobile xxxxxxx
5 Product and By Product : TERRACOTTA POTS & DÉCOR ITEMS
6 Name of the project / business activity proposed : TERRACOTTA POTTERY(MANUALLY) UNIT
7 Cost of Project : Rs.10.82 Lakhs
8 Means of Finance
Term Loan Rs.6.75 Lakhs
Own Capital Rs.1.08 Lakhs
Working Capital Rs.2.99 Lakhs
9 Debt Service Coverage Ratio : 3.91
10 Pay Back Period : 5 Years
11 Project Implementation Period : 5-6 Months
12 Break Even Point : 38%
13 Employment : 17 Persons
14 Power Requirement : 2.00 HP
15 Major Raw materials : Mud clay, compost cakes, sand, paddy husk etc.
16 Estimated Annual Sales Turnover (Max Capacity) : 61.03 Lakhs
17 Detailed Cost of Project & Means of Finance
COST OF PROJECT (Rs. In Lakhs)
Particulars Amount
Land Own/Rented
Plant & Machinery 2.00
Civil work 5.00
Furniture & Fixtures 0.50
Working Capital 3.32
Total 10.82
MEANS OF FINANCE
Particulars Amount
Own Contribution 1.08
Working Capital(Finance) 2.99
Term Loan 6.75
Total 10.82
TERRACOTTA POTTERY PRODUCTS
MANUFACTURING
Introduction: Terracotta is a remarkable and unique sort of fired specialty. It is
the term typically utilized for models made in ceramic, and furthermore for
different utilitarian items including vessels (eminently vases), water and waste
water pipes, material tiles, blocks, and surface frivolity in building development.
Generally, what makes it unique in relation to other earthenware creates is that it
includes ornamentation, utilization of common tones/colors and experimentation
with inventive shapes. The crude material utilized for this art is a sort of soil
accessible locally. It gives the thing a characteristic tone. Around 200 family units
are occupied with this work. Earthenware is like stoneware, in which craftsperson
utilize neighborhood dirt accessible in stream beds to make things, for example,
lights, flame stands, figures of gods and creatures, and so forth.
Terracotta is the hard, moisture less, partially burnt clay used for pottery. In this
craft, the objects are not made on potter’s wheel, as done in pottery. Terracotta
clay is easy to sculpt into all sorts of shapes. Once shaped, it’s heated to 1,000-
2,000° F to harden. Then, a simple coat of glaze can make terracotta watertight.
Terracotta has been around for a long time. In fact, it was the only clay product
used until around the 14th century.
Archeologists have found earthenware designs that are 5,000 years of age.
Aurangabad, a little town is a good way off of 19 kilometers from Gorakhpur,
which merits extraordinary reference in earthenware toys. Among the earth
results of Uttar Pradesh, mud figures of creatures, divine beings and goddesses are
made by neighborhood potters at Gorakhpur. The creation of earthenware
ceramics is no common cycle. Each earthenware pot or piece of craftsmanship is
made by an interesting cycle with elegance and commitment and the time taken to
make such a show-stopper is the thing that makes earthenware so significant and
costly.
Uses & Market Potential:
Terracotta is the term regularly utilized for design made in stoneware, and
furthermore for different useful uses including vessels (remarkably vases), water
and waste water pipes, material tiles, blocks, and surface adornment in building
development. The term is additionally used to allude to the characteristic caramel
orange shade of most earthenware, which changes extensively.
The famed baked clay or ‘terracotta’ products made from the special soil found in
Bhathat area of Uttar Pradesh’s Gorakhpur district got the Geographical Indication
(GI) tag. Terracotta products are a major source of income for the residents of
Gorakhpur area in this district. The terracotta artists make various structures like
bells, vases, Ganesha Sculptures, tables, elephants, deer, horses, bullock carts,
horse carts, lamps and chandeliers. There are more than 1,000 varieties of
terracotta work designed by the local craftsmen.
The cycle of GI confirmation for earthenware items is in progress. It will profit the
specialists and those engaged with its exchange public and manage market.
Earthenware was chosen under the 'One District One Product' plan of the Uttar
Pradesh government and will before long get the GI tag. The skilled workers are
basically spread over the towns of Aurangabad, Bharwalia, Langadi Gularia,
Budhadih, Amawa, Ekla and so forth in Bhathat and Padri Bazar, Belwa Raipur,
Jungle Ekla No-1, Jungle Ekla No-2 in Chargawan square of Gorakhpur.
A huge number of hands have gotten overall appreciation for the city of
Gorakhpur. Gorakhpur centers around the unassuming specialty of earthenware
toy making that enhances our day by day life.
Product:
TERRACOTTA POTS & DÉCOR ITEMS
Raw Material:
1. Mud clay
2. Starch/gum
3. Mustard oil
4. Paddy husk
5. Grass
6. Compost cakes
7. Coal/kindling
8. Sand
9. Debris
Manufacturing Process:
Fig. 1 – Process Flowchart
Area:
The industrial setup requires space for Inventory, workshop or manufacturing
area, space for polishing area. Also, some of the area of building is required for
office staff facilities, office furniture, etc. thus, the approximate total area required
for complete industrial setup is 1000Sqft
Cost of Machines:
S No. Machine Unit Price
1. Furnace 1 1,50,000/-
2. Other machines & equipments 50,000/-
Total 2,00,000/-
Power Requirement- - The estimated Power requirement is taken at 2
KW
Manpower Requirement– Following manpower is required:
Furnace Operator-1
Skilled/unskilled labours-12
Helpers-2
Manager-1
Accountant cum Store Keeper-1
PROJECTED BALANCE SHEET
PARTICULARS I II III IV V
SOURCES OF FUND
Capital Account
Opening Balance - 0.83 1.99 3.16 4.49
Add: Additions 1.08 - - - -
Add: Net Profit 3.25 4.96 5.97 6.74 7.56
Less: Drawings 3.50 3.80 4.80 5.40 6.10
Closing Balance 0.83 1.99 3.16 4.49 5.95
CC Limit 2.99 2.99 2.99 2.99 2.99
Term Loan 6.00 4.50 3.00 1.50 -
Sundry Creditors 0.75 0.84 0.93 1.03 1.14
TOTAL : 10.57 10.32 10.08 10.02 10.08
APPLICATION OF FUND
Fixed Assets ( Gross) 7.50 7.50 7.50 7.50 7.50
Gross Dep. 1.10 2.04 2.84 3.52 4.10
Net Fixed Assets 6.40 5.46 4.66 3.98 3.40
Current Assets
Sundry Debtors 1.84 2.18 2.46 2.75 3.05
Stock in Hand 2.23 2.47 2.73 3.01 3.29
Cash and Bank 0.10 0.20 0.23 0.28 0.33
TOTAL : 10.57 10.32 10.08 10.02 10.08
- - - - -
PROJECTED PROFITABILITY STATEMENT
PARTICULARS I II III IV V
A) SALES
Gross Sale of Terracotta Pots 20.48 24.23 27.34 30.59 34.00
Gross Sale of Terracotta Décor items 16.35 19.44 21.86 24.39 27.02
Total (A) 36.84 43.67 49.20 54.98 61.03
B) COST OF SALES
Raw Material Consumed 14.93 16.77 18.68 20.66 22.70
Elecricity Expenses 0.30 0.33 0.36 0.39 0.42
Repair & Maintenance 0.18 0.22 0.25 0.27 0.31
Labour & Wages 13.10 14.41 15.86 17.44 19.19
Depreciation 1.10 0.94 0.80 0.68 0.58
Cost of Production 29.61 32.67 35.94 39.45 43.19
Add: Opening Stock /WIP - 1.48 1.63 1.80 1.97
Less: Closing Stock /WIP 1.48 1.63 1.80 1.97 2.16
Cost of Sales (B) 28.13 32.52 35.78 39.27 43.01
C) GROSS PROFIT (A-B) 8.70 11.15 13.41 15.71 18.02
23.63% 25.53% 27.27% 28.57% 29.53%
D) Bank Interest i) (Term Loan ) 0.73 0.60 0.43 0.27 0.10
ii) Interest On Working Capital 0.33 0.33 0.33 0.33 0.33
E) Salary to Staff 3.78 4.54 5.44 6.53 7.84
F) Selling & Adm Expenses Exp. 0.61 0.73 0.82 1.22 1.36
G) TOTAL (D+E+F) 5.46 6.19 7.03 8.35 9.63
H) NET PROFIT 3.25 4.96 6.39 7.36 8.39
8.8% 11.4% 13.0% 13.4% 13.8%
I) Taxation - - 0.42 0.62 0.84
J) PROFIT (After Tax) 3.25 4.96 5.97 6.74 7.56
PROJECTED CASH FLOW STATEMENT
PARTICULARS I II III IV V
SOURCES OF FUND
Own Contribution 1.08 -
Reserve & Surplus 3.25 4.96 6.39 7.36 8.39
Depriciation & Exp. W/off 1.10 0.94 0.80 0.68 0.58
Increase In Cash Credit 2.99
Increase In Term Loan 6.75 - - - -
Increase in Creditors 0.75 0.09 0.10 0.10 0.10
TOTAL : 15.92 5.99 7.28 8.14 9.07
APPLICATION OF FUND
Increase in Fixed Assets 7.50 - - - -
Increase in Stock 2.23 0.25 0.26 0.27 0.29
Increase in Debtors 1.84 0.34 0.28 0.29 0.30
Repayment of Term Loan 0.75 1.50 1.50 1.50 1.50
Taxation - - 0.42 0.62 0.84
Drawings 3.50 3.80 4.80 5.40 6.10
TOTAL : 15.82 5.89 7.25 8.08 9.03
Opening Cash & Bank Balance - 0.10 0.20 0.23 0.28
Add : Surplus 0.10 0.10 0.03 0.05 0.05
Closing Cash & Bank Balance 0.10 0.20 0.23 0.28 0.33
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL
PARTICULARS I II III IV V
Finished Goods
(15 Days requirement) 1.48 1.63 1.80 1.97 2.16
Raw Material
(15 Days requirement) 0.75 0.84 0.93 1.03 1.14
Closing Stock 2.23 2.47 2.73 3.01 3.29
COMPUTATION OF WORKING CAPITAL REQUIREMENT
Particulars Amount Margin(10%) Net
Amount
Stock in Hand 2.23
Less:
Sundry Creditors 0.75
Paid Stock 1.48 0.15 1.33
Sundry Debtors 1.84 0.18 1.66
Working Capital Requirement 2.99
Margin 0.33
MPBF 2.99
Working Capital Demand 2.99
REPAYMENT SCHEDULE OF TERM LOAN 11.0%
Year Particulars Amount Addition Total Interest Repayment Cl Balance
I Opening Balance
Ist Quarter - 6.75 6.75 0.19 - 6.75
Iind Quarter 6.75 - 6.75 0.19 - 6.75
IIIrd Quarter 6.75 - 6.75 0.19 0.38 6.38
Ivth Quarter 6.38 - 6.38 0.18 0.38 6.00
0.73 0.75
II Opening Balance
Ist Quarter 6.00 - 6.00 0.17 0.38 5.63
Iind Quarter 5.63 - 5.63 0.15 0.38 5.25
IIIrd Quarter 5.25 - 5.25 0.14 0.38 4.88
Ivth Quarter 4.88 4.88 0.13 0.38 4.50
0.60 1.50
III Opening Balance
Ist Quarter 4.50 - 4.50 0.12 0.38 4.13
Iind Quarter 4.13 - 4.13 0.11 0.38 3.75
IIIrd Quarter 3.75 - 3.75 0.10 0.38 3.38
Ivth Quarter 3.38 3.38 0.09 0.38 3.00
0.43 1.50
IV Opening Balance
Ist Quarter 3.00 - 3.00 0.08 0.38 2.63
Iind Quarter 2.63 - 2.63 0.07 0.38 2.25
IIIrd Quarter 2.25 - 2.25 0.06 0.38 1.88
Ivth Quarter 1.88 1.88 0.05 0.38 1.50
0.27 1.50
V Opening Balance
Ist Quarter 1.50 - 1.50 0.04 0.38 1.13
Iind Quarter 1.13 - 1.13 0.03 0.38 0.75
IIIrd Quarter 0.75 - 0.75 0.02 0.38 0.38
Ivth Quarter 0.38 0.38 0.01 0.38 -
0.10 1.50
Door to Door Period 60 Months
Moratorium Period 6 Months
Repayment Period 54 Months
PARTICULARS I II III IV V
CASH ACCRUALS 4.35 5.89 6.77 7.42 8.14
Interest on Term Loan 0.73 0.60 0.43 0.27 0.10
Total 5.08 6.49 7.20 7.69 8.24
REPAYMENT
Repayment of Term Loan 0.75 1.50 1.50 1.50 1.50
Interest on Term Loan 0.73 0.60 0.43 0.27 0.10
Total 1.48 2.10 1.93 1.77 1.60
DEBT SERVICE COVERAGE RATIO 3.43 3.09 3.73 4.35 5.14
AVERAGE D.S.C.R. 3.91
Assumptions:
1. Production Capacity of a Terracotta Pottery (Manually) unit is taken at 125 pcs
of Terracotta Pots and 45 pcs of Terracotta Décor Items per day. First year,
Capacity has been taken @ 50%.
2. Working shift of 10 hours per day has been considered.
3. Raw Material stock and Finished goods closing stock has been taken for 15
days.
4. Credit period to Sundry Debtors has been given for 15 days.
5. Credit period by the Sundry Creditors has been provided for 15 days.
6. Depreciation and Income tax has been taken as per the Income tax Act,1961.
7. Interest on working Capital Loan and Term loan has been taken at 11%.
8. Salary and wages rates are taken as per the Current Market Scenario.
9. Power Consumption has been taken at 2 KW.
10. Selling Prices & Raw material costing has been increased by 3% & 2%
respectively in the subsequent years.
DISCLAIMER
The views expressed in this Project Report are advisory in nature. SAMADHAN
assume no financial liability to anyone using the content for any purpose. All the
materials and content contained in Project report is for educational purpose and
reflect the views of the industry which are drawn from various research material
sources from internet, experts, suppliers and various other sources. The actual
cost of the project or industry will have to be taken on case to case basis
considering specific requirement of the project, capacity and type of plant and
other specific factors/cost directly related to the implementation of project. It is
intended for general guidance only and must not be considered a substitute for a
competent legal advice provided by a licensed industry professional. SAMADHAN
hereby disclaims any and all liability to any party for any direct, indirect, implied,
punitive, special, incidental or other consequential damages arising directly or
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